Making the Most of the C-TPAT Program

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Making the Most of the C-TPAT Program

06/13/2016
Change in the fashion world is constant as consumer's tastes continually shift.  For today's brand manufacturers, these ceaseless changes aren't simply confined to the runways. Sourcing and supply chain considerations are as fluid as the latest fashion trends as new supplier hubs become more lucrative for lower cost sourcing opportunities, such as Vietnam or Africa for many apparel manufacturers today.

In this sourcing environment where supplier diversification is paramount, it becomes more important for organizations to meet the stringent import and safety regulations across a range of countries.  Leaders are taking advantage of government programs such as C-TPAT, AEO and J-AEO to ensure a secure supply chain and expedite shipment processing through border points. It isn't that easy to earn the coveted "golden ticket" for customs but you can get help to build out a supply chain network that meets the standards. 

C-TPAT: The first step in partnering with CBP
The C-TPAT (Customs-Trade Partnership Against Terrorism) program is a voluntary government–industry program created by U.S. Customs and Border Protection (CBP) soon after the terror attacks on the United States on Sept. 11.   C-TPAT helps improve the safety of world trade by increasing global supply chain security and enhancing U.S. border protection. According to the CBP, more than 13,000 companies are currently C-TPAT certified and represent more than 50 percent of the goods imported into the United States.

With the goal of including the point of origin as a secure zone, C-TPAT lowers the security risk on inbound shipments and enhances CBP efficiencies as they can direct inspection resources to higher risk shipments. The program primarily focuses on key areas of cargo security that include physical site security, personnel security, data security, and compliance process improvement. By entering the program, companies and trading partners are required to meet established security standards. 

Ascena Global Sourcing (AGS) is a division of Ascena Retail Group and serves as the single direct sourcing organization supporting all Ascena brands. Ascena Retail Group is an apparel retailer with brands that include Ann Taylor, Lane Bryant, Dress Barn and The Loft. AGS recently decided to become a C-TPAT participant. Donna Sikyta, AGS' director of compliance, said, "In reviewing our global supply chain network, Ascena determined that C-TPAT participation will result in speed and cost efficiencies through improved cargo security, reduced lead time at the border and lower cost of customs exams."

How the program works
For those of you who fly frequently, you can think of this program as a corporate and more intensive, thorough version of the Global Entry and TSA Pre?® programs that provide expedited screening for U.S. air travelers. In the case of C-TPAT, your organization signs an agreement with CBP to identify any security gaps, meet specific security standards and establish global supply chain security best practices. Initially, you will provide the CBP with a security profile highlighting your organization's current security practices.

Throughout the approval process, you will address a number of security topics and establish specific plans to meet the C-TPAT's security standards for your global supply chain. As a result of meeting all of the requirements, your organization is viewed by CBP as lower risk and your global shipments are less likely to be inspected.

As part of the program, your organization is subject to a validation meeting with CBP at both your domestic receiving site and at an overseas supplier.  This is an opportunity for your firm to demonstrate how C-TPAT minimum-security guidelines are being met. For CBP, the primary goal is to ensure appropriate measures are in place to secure the supply from the point of origin through to distribution.  "In preparing for the C-TPAT validation process, Ascena's C-TPAT consultant was instrumental in identifying security shortcomings, developing best practices, organizing training and, ultimately, meeting the validation requirements," said Sikyta.

During the site visit, some of the following topics will be reviewed and inspected:
  • General site information (factory size, number of employees, shift details, etc.)
  • Business partners (C-TPAT status of suppliers, contract carriers and other partners)
  • Container and trailer requirements (verification of physical integrity, seals, etc.)
  • Personnel security (background checks, pre-employment verification, etc.)
  • Procedural security (documented procedures and accuracy)
  • Physical security (protective barriers, inspections, alarms, etc.)
  • Information technology security (passwords, policies, network protection, etc.)
  • Security training and threat awareness (programs, frequency, etc.) 
What are the benefits associated with C-TPAT certification?
Like the passenger security programs at airports, the benefits are mutual. "With entry into the C-TPAT program, Ascena Retail Group expects direct cost savings from lower cargo claims and loss of company property. We also anticipate the indirect savings of lower internal theft claims," said Sikyta. CBP gains improved security of the borders and your organization receives the benefit of expedited shipments through the border crossing process. These benefits are driven by:
  • Reduced number of CBP inspections
  • Preferred access to Free and Secure Trade lanes
  • Priority processing for any CBP inspections
  • Possible participation in the Trusted Trader program
How is C-TPAT changing with the introduction of the Trusted Trader Program?
Similar to many government programs, C-TPAT continues to evolve as the United States increases the focus on mitigating the risks associated with global trade. Recently announced, the Trusted Trader program is currently in the testing phase. The goal of this program is to combine the C-TPAT and the Importer Self-Assessment (ISA), a voluntary trade compliance program, to further enhance global supply chain security and trade compliance. This latest program will allow apparel companies to gain additional benefits and enhance global supply chain efficiencies by unifying C-TPAT and ISA within the one Trusted Trader partnership program. A new brass ring to reach for.

Moving forward with certification
C-TPAT and similarly beneficial programs in other countries (including the EU AEO and J-AEO) demand serious consideration and commitment from internal and external parties. Preparing documentation for training and procedures to begin working toward these standards, conducting prep visits and the audit process itself places a burden on resources across the board.  In the case of Ascena, Sikyta pointed out, "We found that C-TPAT procedures boost our ability to proactively manage global trade compliance requirements and improve cross-border operations."

Fortunately, companies need not face the complexities of obtaining C-TPAT certification on their own. The right automation technology and solutions can help you maximize the visibility and management over your import operations and international shipments required to meet the program standards. When seeking entrance into the program, many companies also engage with experienced advisors to effectively guide them through the application and qualification process. By relying on experienced professionals and current technology, the validation process is accelerated and benefits are quickly realized. 

 


EU & AEO: "For EU operations, fully consider the AEO program"
Similar to the U.S. C-TPAT program, the European Union (EU) has a program focused on improving international supply chain security and facilitating global trade. The EU established the Authorized Economic Operator (AEO) program in 2008 to expedite customs processing along with improving border security and safety. The program is not mandatory but similar to C-TPAT, participation can streamline customs requirements and possibly accelerate shipments through EU customs. More specifically, teams operating in the EU can benefit from fewer security related controls, priority treatment during customs clearance and easier admittance to simplified EU customs procedures. If an organization is not already a part of this program, it's time to seriously consider and justify participation in the AEO program.
 
Apparel companies with EU operations should be aware that the Union Customs Code introduced changes effective May 1, 2016. These changes will update the requirements to become AEO certified and are primarily aimed at further modernizing EU customs safety and clearance policies. Companies that decide not to pursue the AEO certification will incur the burden of providing financial guarantees to cover duties and VAT associated with EU import activities. Obtaining the AEO certification for your organization not only results in fewer customs delays but will also reduce the expected rise in future EU import operating costs.



Suzanne Richer is the director, trade advisory practice for Amber Road. Click here to learn more about Amber Road's Global Trade Management software or contact us at [email protected]